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
An audit plays a vital role in imparting knowledge about the
market and its environment.

It is a tool for recording and analyzing information.

The audit for recording, analyzing, and measuring the
performance of the company's marketing activities is called
marketing audit.
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
Marketing audit has two variables namely the external audit
and the internal audit.

The marketing performance of an organization is gauged in
terms of its market share, profitability, and growth of sales.

The marketing effectiveness depends on the customer
philosophy, marketing orientation, marketing information,
strategic orientation, and operational efficiency.
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
An effective audit should be systematic, comprehensive,
independent, and periodic.
A marketing audit has six components:
1.
Marketing environment audit
2.
Marketing strategy audit
3.
Marketing organization audit
4.
Marketing systems audit
5.
6.
Marketing productivity audit
Marketing function audit
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
Strengths, Weaknesses, Opportunities and Threats (SWOT)
analysis is the most commonly used tool in organizations.

Strengths and Weaknesses pertain to the internal environment.

Opportunities and Threats pertain to the external environment.

After SWOT analysis, the strategy has to be formulated based
on the insights from the analysis.

Some of the reasons for the failure of SWOT analysis are lack
of proper focus during the analysis and lack of in-depth
information.
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THE NATURE, STRUCTURE AND
PURPOSE
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Where is the
company now?
1. The organization’s current market
position
2. The nature of environmental
Where does the
company want to go?
opportunities and threats
3. The organization’s ability to cope with
environmental demands.
How should the company
organize its resources to get
there?
The audit is the means
by which the first of
these questions is
answered
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An audit is a systematic, critical and unbiased
review and appraisal of the environment and of
the company’s operations. A marketing audit is
part of the larger management audit and is
concerned
(specifically)
with
the
marketing
environment and marketing operations.
“The means by which a company can identify its
own strengths and weaknesses as they relate to
external opportunities and threats. It is thus a way
of helping management to select a position in that
environment based on known factors.”
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1. The detailed analysis of the external
environment and internal situation
2. The objective evaluation of past
performance and present activities
3. The clearer identification of future
opportunities and threats.
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
“Irrespective of the size of the organization,
corporate decisions have to be made within the
constraint of a limited total resource.” (Ansoff,
1968)

The marketing audit can therefore be seen in
terms of providing a sound basis for process of
resource allocation.

Any strategy that is developed should be far
more consistent both with the demands of the
environment
and
the
organization’s
true
capabilities and strengths.
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STRUCTURE
1. The organization’s environment (opportunities and
threats) .
2. Its marketing systems (strengths and weaknesses).
3. Its marketing activities.
External
Audit
Internal
Audit
FOCUS
1. Environmental or Market Variables :
macro-environmental forces (political/
legal, economic/ demographic,
social/cultural, and technological)
2. Operational Variables: microenvironmental actors (customers,
competitors, distributors and suppliers)
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1. Pre-audit activities in which the auditor decides upon the
precise breadth and focus of the audit.
2. The assembly of information on the areas which affect the
organization’s marketing performance – these would
typically include the industry, the market, the firm and
each of the elements of the marketing mix.
3. Information analysis
4. The formulation of recommendations
5. The development of an implementation program.
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Step 1 Define the market
 Develop:
➡ Statement of purpose in terms of benefits
➡ Product scope
➡ Size, growth rate, maturity state, need for
primary versus selective strategies
➡ Requirements of success
➡ Divergent definitions of the above by
competitors
➡ Definition to be used by the company
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Step 2 Determine performance differentials
➡ Evaluate industry performance and company
differences
➡ Determine differences in products,
applications, geography and distribution
channels
➡ Determine differences by customer set
Step 3 Determine differences in competitive
programs
 Identify and evaluate individual companies for
their:
➡ Market development strategies
➡ Product development strategies
➡ Financing and administrative strategies and
support
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Step 4 Profile the strategies of competitors
➡ Profile each significant competitor and/or
distinct type of competitive strategy
➡ Compare own and competitive strategies
Step 5 Determine the strategic planning structure

When size and complexity are adequate:
➡ Establish planning units or cells and designate
prime and subordinate dimensions
➡ Make organizational assignments to product
managers, industry managers and others
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Marketing effectiveness is, to a very large extent,
determined by the extent to which the organization
reflects the five major attributes of a marketing
orientation, namely:
1. A customer-oriented philosophy
2. An integrated marketing organization
3. Adequate marketing information
4. A strategic orientation
5. Operational efficiency
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
Each of these dimensions can be measured relatively easily by means of a
checklist and an overall rating then arrived at for the organization: an
example of this appears in figure 2.2 (text book)
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To separate
meaningful data
from that which is
merely interesting
To discover what
management must do to
exploit its distinctive
competencies of the
market segments both
now and in the longer
term.
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Organizational advantages
 • Economies of scope and /or scale
 • Flexibility
 • Competitive stance
 • Size
 • Speed of response
 • Past performance
 • Financial strengths
 • Patterns of ownership
 • Reputation
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
Departmental and
functional advantages

Production
• Technology
• Process efficiency
• Economies of scale
• Experience
• Product quality
• Manufacturing flexibility
Personnel
• Good management–work
• Workforce flexibility

Research and development

• Product technology
• Patents



Marketing











• Customer base
Customer knowledge
• New product skills
• Pricing
• Communication and
advertising
• Distribution
• Sales force
• Service support
• Reputation






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 Advantages
based on relationships with
external bodies
 • Customer loyalty
 • Channel control
 • Preferential political and legislative
treatment
 • Government assistance
 • Beneficial tariff and non-tariff trade
barriers
 • Cartels
 • Intra-organizational relationships
 • Access to preferential and flexible financial
resources
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Sources of competitive advantage
(adapted from McDonald, 1990)
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The threats matrix
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1. An ideal business that is characterized by
numerous opportunities but few, if any ,
threats
2. A speculative business that is high both in
opportunities and threats
3. A mature business that is low both in
opportunities and threats
4. A troubled business that is low in
opportunities but high in threats.
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
A firm's strengths are its resources and capabilities that
can be used for developing a competitive advantage.
Examples of such strengths include:

Patents

Strong brand names

Good reputation among customers

Cost advantages from proprietary know-how

Exclusive access to natural resources

Good access to distribution networks

The absence of certain strengths are a weakness. For
example, the following may be considered weaknesses:

Lack of patent protection

A weak brand name

Poor reputation among customers

High cost structure

Lack of access to best natural resources

Lack of access to key distribution channels

In some cases, a weakness may be the flip side of a
strength.

For
example,
a
firm
has
a large
amount
of
manufacturing capacity.

While this capacity may be considered a strength that
competitors do not share, it also may be a considered
a weakness if the large investment in manufacturing
capacity prevents the firm from reacting quickly to
changes in the strategic environment.
 To
develop strategies that take into account
the SWOT profile, a matrix of these factors
can be constructed.

The SWOT matrix, can be changed into what
is known as the TOWS Matrix that is shown
on the next slide:
Strengths
TOWS
Analysis
Opportunities S-O
Weaknesses
W-O
Strategies Strategies
Threats
S-T
W-T
Strategies Strategies

S-O strategies pursue opportunities that fit well the
company's strengths.

W-O
strategies
overcome
weaknesses
to
pursue
opportunities.

S-T strategies identify ways that the firm can use its
strengths to reduce its vulnerability to external threats.

W-T strategies make a defensive plan to prevent the
firm's weaknesses from making it susceptible to
external threats.
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